This archival piece was one of the first major publications I made to a website. It was posted to PBNation during a time when the paintball industry was hanging by a thread. Since then, the industry has seen a massive period of growth and prosperity and is once again a thriving extreme sport.
An Honest Look at why the Paintball Industry is Failing.
I have been pondering doing a piece like this for some time now. Growing up, this sport has always been the one constant in my life. I've owned and operated 2 different shops, managed multiple fields, and am currently in the process of running my own. I have done manufacturing work for paintball companies large and small. And, I have been a player for as long as I can remember. I have watched this industry go from the largest growing extreme sport in the world, to the state it is in today, and let me tell you, its a state of emergency.
The Local Operator, Paintball's Champion
When put as cut and dry as possible, the life-blood of this industry is the local operator. No matter what way you try to look at it or word it, it is these champions of paintball that make it all possible.
Like any business, the owners of local fields and pro-shops desire one main set of objectives, increase revenue, decrease liabilities. And in a time where the industry is failing this is becoming harder and harder for local field owners. Many of you "old-timers" can probably remember a time 5-10 years ago where fields were everywhere and more and more were popping up each year to help satisfy the needs of a growing market. Paintball was no longer just a bunch of guys in the woods shooting each other in the ass, it was a full blown industry. By the mid 2000's paintball was earning nearly $700 million nationwide for all of its business'. By 2006 almost 5 million people in the United States were playing paintball an average of 21 days per year.
This meteoric rise eventually came to a cool down point. In late 2007, when the recession hit, paintball participants began to stop going out to the field and much. The average household income of a paintball participant was $67,300/year at the time and this showed, in income, that the average paintball player was quite average. Paintball, like many other industries, was just not recession proof and took a hard hit. Flash forward to today and we see a nationwide industry profit of about $580 million dollars, and roughly an 18% decrease in growth.
David, Meet Goliath
One of the biggest areas of concern, that in my opinion have been destroying the industry as a whole, is online retailers. The rise of the online paintball supplies retailer brought along a large decrease in average marker, paint, and accessories cost. While this is quite good for the average paintball participant, the negative impact of local fields was seen and felt pretty quickly.
With so many online retailers all competing for business, price wars began. Local fields just could not compete with the purchasing power retail suppliers have. A field buying maybe 5-10 markers a month to sell could not see anywhere near the same kind of margins as a retailers purchasing hundreds of markers in the same timeframe. MAP prices violations began to stack among online retailers and local fields and shops felt the pain more than anyone. With a decrease in margins, and an increase in held inventory, many fields and shops just decided to call it quits and close their doors. According to PBR, their are currently around 1450 fields operating in the United States, this number being drastically reduced from a 2007 statistic listing over 2300 fields in the United States.
It is evident that fields have been consistently closing over the last 4-7 years. Lets look into some reasons why. So lets create an example using 3 hypothetical companies, Marker Company X, Local Field Y, and Online Guy Z.
So Marker Company X decides to sell their all new gun to Local Field Y and Online Guy Z. Both parties purchase the marker at the wholesale price of $100. The marker has a Minimum advertised price(MAP) of $150 and a Manufactures Suggested Retail Price(MSRP) of $200.
Five or ten years ago Local Field Y and Online Guy Z would both sell the marker for the MSRP of $200 and call it a day. Everyone was making money, everyone was happy. Then the industry started to evolve. Online Guy Z began to sell the marker for 10 or 20% off and watch profits soar, while Local Field Y continued to sell at $200 and watch sales decrease. Flash forward to the current market and now Online Guy Z is selling the marker for $120, while Local Field Y is still selling the marker at $200. Online Guy Z is making smaller margins while moving a larger volume, where Local Field Y is lucky if they sell even one unit. Local Field Y's inventory comes to a standstill and they decide to close shop, further increasing Online Guy Z's market share and his stranglehold on prices.
The problem with all of this is that all the manufactures are already in such fear of losing money, that they cannot afford to put a halt to Online Guy Z and his price gouging and they have to watch as their client list dwindles and Online Guy Z gains more and more leverage with the company.
Do not Pity your Master
Online retailers are not the only problem. Although manufactures are being leveraged by many of the online retailers, they themselves can take some of the blame for this market downturn. Five or Ten years ago it was almost unheard of for large manufactures to be sponsoring lowly divisional teams, as it did not make financial sense since many of these divisional players were their main target market. These companies would bite the proverbial bullet and cough up free product for the professional teams in exchange for the advertising and marketing that the pro teams offered for them.
Fast forward to today and we see many major manufactures flooding the market with sponsorships for divisional teams in order to create an artificial market share and further increase their presence in the marketplace. I could go into how unsustainable this is in business, but that is another article. But, these actions are temporarily helping to increase revenue and market share for manufactures while leaving their own dealers, the local fields and shop, high and dry. 5-10 years ago before this was occurring, fields would sponsor the lower divisional players with gear or paint discounts to not only help sell more product, but to help local players have the ability to afford to play and increase attendance at the field. It worked great and many fields thrived.
The Rise of the Conglomerate
In business there are two main ways to increase your market share, build it or buy it. Large conglomerates, which I will leave unnamed, push to purchase small companies in order to increase their market share. Many of these companies doing this start out with non-paintball management which cares little about the effects of their action on the future of the sport, and more or less, just see the here and the now of the industries profit. Everyone wants a piece of that constantly diminishing $580 million pie.
Years ago I'm sure we can all remember the sheer number of companies out there. Whether you wanted custom hard parts for your gun or a set of gloves, there was a company who specialized in it. Each company would find their niche, fill it, and everyone would make a living. The constant infusion of new products to the marketplace kept shop inventories fresh and profits rolling. But as of late, many of these companies are struggling with the increase of technology in the game and the large conglomerates have been buying these small companies up to increase market share.
A Changing Attitude
Although I feel manufactures and online retailers are the main culprits to the failures in the industry, I think players are to blame as well. The increase of technology in paintball has made shooting a gun 12, 15, or 18+ balls per second pretty much automatic. Rarely do you pick up a gun in todays industry that doesn't have the ability to do this. Whether its a low end blow back or a high end spool they all can do it.
I can remember years ago when players would first get into the sport, they would start with a low end mechanical blow back. They would learn how to play the game out in the woods with their friends and this would eventually translate into playing at a local field. Players learned how to play without the assistance of technology and they learned to play the game right.
Now in these days, equipment that can act as a crutch to newer players. This is evident everywhere and it is causing issues at local fields across the country. Many newer players that come out to rent and play once or twice a year are now turning away from the sport and it is causing us to lose more and more players each year. Players who used to go to the field and have a good time are now greeted by young kids and adults decked out in new gear ready to blast them in the face at 15 balls per second with no self control on their play, just because the technology allows it. This is turning players away from our sport and is a big cause of concern that field owners and manufactures must find an answer to.
The attitudes displayed by many current players is not conducive to a growing industry and hinders the ability for new players to join the sport and stick with it.
Overall, I feel that some big changes are needed in this sport in order to get back to the kind of growth we saw in the early and mid 2000's. Online retailers need to get a grip, and manufactures cannot continue to enable them to use their market leverage against them. Without an infusion of new players and a changed attitude of players this industry will continue to fail until we hit a point of no return and become just another extreme sport afterthought like inline skating or BMX.